DIRECTORS' DEALINGS: The big movers and shakers on the Aim

Among clothing retailers, it is common practice to insist that staff dress in the apparel sold on the shop floor.

Customers can see how the clothes look and if the employees seem to enjoy wearing them, it sends out all the right signals to would-be purchasers.

But if employees are wearing jeans and tee-shirts and the store sells smart suits, potential customers may conclude either that the employees are not suited to the shop or that the clothes are not terribly appealing.

A similar logic might apply in the stock market. When directors buy shares in the companies they run, this suggests a vote of confidence in the business. When they sell, it seems ominous.

The Midas Directors’ Dealings column analyses the largest sales and purchases made by board directors in recent months with the aim of discovering if ordinary investors should be following suit.

Over the past three months, the largest purchase by far related to Immunodiagnostic Systems (IDS), a company that makes medical testing kits to check for vitamin D deficiency.

Non-executive director Burkhard Wittek was responsible for buying shares worth almost £3.4 million in the company.

Most of these were acquired through Forum Venture Capital and Forum European Smallcaps, two private investment companies with which Wittek is associated. But Wittek’s wife, Gabriele also bought stock as did his son Leonard.

Wittek has long been an IDS fan, buying into the company in 2007 and subsequently taking a seat on the board. Forum and the Wittek family now own 27 per cent of the stock, having bought more than a million shares earlier this year.

Chief executive Christopher Cookson, deputy chairman Roger Duggan and non-executive director Patrik Dahlen were also in the market, spending more than £60,000 on almost 20,000 shares.

Equally impressive, outgoing finance director Paul Hailes spent more than £20,000 on 6500 shares, even though he has now relinquished his position and is moving to North America to work for Immunodiagnostics there.

The directors’ purchases come at an interesting time. Immunodiagnostic Systems joined Aim in 2004 at 51p and saw its shares rise to a high of £12.44 last July.

But the past few months have been torrid. At the interim figures in November, chairman Tony Martin admitted the group was coming under competitive pressure.

Just two months later, Martin was forced to explain that sales and profits would be lower than expectations.

The shares tanked in response, dipping to a low of 288p the day after the New Year profit warning.

They subsequently rose to 470p but are languishing at 318p today, even though the company launched a new type of vitamin D test just this week.

IDS directors bought stock largely between 290p and 309p and clearly have faith in the business. Analysts have mixed views however.

Vitamin D deficiency is of growing concern, particularly in America and Northern Europe. IDS is a key player in this sector and is also broadening, hoping to launch new tests for diabetes, hypertension and bone strength this year.

The management is dynamic too. Martin only became chairman last summer, Ian Cookson became chief executive 18 months ago and a new finance director, Gerard Murray, has just joined the group.

But competition in the vitamin D testing market is increasing rapidly and Immunodiagnostics is a small player in an industry dominated by large multinationals.

Adventurous investors may want to follow the directors’ lead, particularly at current levels, but small purchases are advisable. This is one shop window where, even though the staff are wearing the outfits, satisfaction is far from guaranteed.

Other notable purchases were made in property firm Conygar Investment Company and mining group West African Minerals.

This company, formerly known as Emerging Metals, focuses on iron ore exploration in West Africa and its shares have shot up from 7.75p at the beginning of the year to 23p today, following a strategic acquisition, a disposal and a strong trading update.

Dattels is a shrewd operator so if he is buying, other investors may want to follow suit. Bearing in mind the recent strong performance however, investors might be better off waiting for any short-term weakness.

As for Conygar, chief executive Robert Ware spent £480,000 on half a million shares and finance director Peter Batchelor spent £230,000 on stock too.

Conygar’s shares have come down from 115p last June to 86p today amid ongoing concerns about commercial property.

Ware remains confident about Conygar’s prospects and he is a veteran of the sector so should be taken seriously. Patient investors may want to buy at current levels but this is likely to be a long-term hold.

On the sales front, three disposals stand out. Robert Adair, outgoing chairman of Plexus Holdings, raised £2.7 million by selling 3.5 million shares.

Mulberry Group chief executive Godfrey Davis raised £2.4 million by selling 150,000 shares. And three directors in Brooks Macdonald, including chief executive Christopher Macdonald, sold almost £5 million worth of shares between them.

Midas has recommended all three stocks in the past two years and all three have proved rewarding investments.

Brooks Macdonald shares have almost doubled from 701p to 1315p since Midas tipped the wealth management group exactly two years ago.

Macdonald and his fellow directors were all founder shareholders and, even after their recent sales, they retain 20 per cent of the business and have pledged not to sell any more stock for two years.

Investors who bought in 2010 should follow Macdonald – sell some but not all their shares.

Plexus has more than doubled in price from 55p to 112p since Midas recommended the shares in January 2011.

The company makes super-strong well-heads for the oil industry and is developing sub-sea products with international oil groups including Shell and Tullow Oil.

Adair is moving on after six years but investors should stay with this stock as prospects are bright.

Mulberry was just 206p when Midas tipped the shares in June 2010. Today they are 1990p.

Davis has already raised several million pounds from selling stock over the past year, although apparently he is heavily involved in charitable work so the money is going towards a good cause.

Any investor who bought at 206p would be advised to follow Davis and sell a large proportion of their stock – the luxury goods market continues to defy gravity but Mulberry shares have had a fantastic run.

INSIDE MIDAS EXTRA

THANK YOU TO OUR READERS

As you know, Midas Extra stopped its service at the end of May.

I would like to thank you for your support over the months and years and hope you will continue to read Midas in the Financial pages of Mail on Sunday and on This is Money every week where Joanne Hart will still be giving her investment tips.

Thank you again and best of luck with all your future investments.
Simon Watkins Financial Editor, Mail on Sunday